Beware the Lazy Thinkers

“The rise and fall of empires is dramatic in the consumer and industrial technology space,” says Andy Griffiths, CEO of the Consumer Appliances Division at Glen Dimplex. “Getting teams together to continuously challenge and reappraise your market, which changes every day in this digital world, is fundamental.”

This continues to be a central challenge for companies across myriad sectors, whether they’re in B2B or B2C. “You have to get away from the running of the business because it can be intellectually lazy. Studying this month’s figures, working out this quarter’s results – that’s not interesting,” continues Andy, who is also former President for the UK and Ireland at Samsung Electronics.

“You need to challenge yourself and your teams to something longer term. You’ve got to do it realistically and for as far as you can see. Normally that’s between two and five years.”

Anita Chandraker, Head of Digital at PA Consulting Group, agrees. She warns: “Beware the lazy thinkers – there are many of them out there. It’s also important to take accountability for tomorrow, because too many people are looking at today. If no one is accountable for innovation, it won’t happen.”

There are very real difficulties for organisations in achieving this, from resetting KPIs to developing a tolerance for failure. “Leaders must put the right framework in place so that individuals and teams can share ideas,” comments Alison Mills, Relationship Manager at Criticaleye. “Setting up cross-functional teams that include a range of individuals with varying skills and experiences could be one way of doing this.”

For Andy there is a simple, yet crucial, point that boards and executive teams need to bear in mind: “The last thing you ever want as a start point is a bunch of clones marching in one single direction going off doing the same things.”

In most cases, a shift in mindset is required. Kevin George, CEO at passenger ferry company Red Funnel Group, reflects on his experiences at British Airways when his team were first tasked with inventing a flat-bed business class seat.

“To come up with a seat that would lie flat and be economically viable just seemed impossible,” he explains. “But it was a question of overcoming that mental barrier and finding a way of doing it.”

When BA created the fully reclining seat in 2001, Kevin said it broke new ground in the airline industry. Now, almost every international airline has adopted them.

From incubation to execution

Those organisations faced with the prospect of having to relearn the art of innovation need a clear understanding of who will be responsible for generating ideas, and who delivers on going to market.

On that point, Anita noted the client challenges highlighted in PA Consulting Group’s ongoing research into innovation. “Certainly the data shows that the biggest challenge companies face is the ability to scale up once they’ve got a good idea,” she said.

There will be serious questions about investment, resource allocation and the risks around how to integrate a new product or service into an organisation.

This is why it’s vital to reflect on the structure, what the levels of accountability and oversight should be, and how this all runs in parallel with ‘business as usual’. David Hollander, CEO at Aqualisa, a UK-based shower manufacturer, comments: “Coming up with new concepts is the easy bit; it’s almost all about execution. That’s where management plays a big part in driving fledgling ideas, presenting visible confidence, allowing time to discuss and evaluate the viability of an idea. Then, it’s about enabling the processes needed to see it through.”

At Aqualisa, David says the company is preparing to launch a new product and different teams are fully involved, working on a collaborative basis: “Our R&D and marketing teams are closely linked. R&D may work to develop a new product in response to a marketing imperative, but equally it can be the other way round. They are led by a Brand and Design Director, who oversees both teams.”

According to Andy, proper thought should be given to creating teams for different stages of the innovation process: “It’s relevant to keep your good thinkers thinking, and have your good doers doing. That, in a consumer market is a more natural segmentation of skills, because you have end users who are continuously demanding, as well as a bunch of competitors agitating your business.

“The innovation team, once they catch their breath post-launch, need to come back to the table two or three months later and start again, using some of the data from how the last project landed.”

That’s the Holy Grail for any business when it comes to innovation – how to keep that cycle going. One great idea and seamless execution won’t guarantee success. Rather, a winning approach lies in the ability to empower those within an organisation to do it time and again.

By Dawn Murden, Editor, Advisory

This Community Update includes insights from a recent Discussion Group: How to Create a Successful Innovation Team

Would you like to share your thoughts on innovation teams? If so, please email dawn@criticaleye.com

Interested in finding out more about cross-functional teams? Then don’t miss our Community Update next week on breaking down organisational silos.

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A Bird’s-Eye View on Innovation

Managing risk and allowing innovation to flourish are two sides of the same coin. Today’s board directors must understand the value of both and create an environment that rewards them appropriately.

Sir Howard Davies, Chairman of the Royal Bank of Scotland, explains that while directors clearly should not be relied on for new product ideas, they have a key role in setting the right tone. “The board should be able to create an environment in which innovation is valued, supported and where people feel self-confident enough to take appropriate risks,” he says.

It’s a point shared by Andrew Minton, Managing Director at Criticaleye. He reasons: “It’s becoming increasingly clear that if a business wants to develop an innovative culture, the board has to create an environment within which people can experiment.

“As a result of increased transparency, non-executive directors must be cognisant of their role in setting the right culture and attitudes. If NEDs don’t appear to value innovation and fresh thinking, the rest of the business will follow suit.”

For Rita Clifton, Non-executive Director at ASOS and Nationwide, this goes beyond simply saying the right things. The modern boardroom must have vibrant, curious individuals who symbolise the behavioural standards and values that they expect from the wider organisation.

She says: “When I started sitting on boards 15 years ago, I would hear many chairmen, chief executives and directors talking about how the business needed to be more innovative; that it needed to move faster. I would look around the table and think: ‘Guys, you’re the problem, you don’t look as though you want to be innovative’.

“In my view, the board directors need to symbolise the best of your organisation. The standards and expectations they set are so important; people pick up cues from what the board appears preoccupied with. Regardless of what you say about culture, if your staff know that your main driver is profit you’re going to encourage fearful and short-term behaviour.”

Complaining about compliance

The challenge for boards is to find the time for strategic thinking when the immediate focus needs to be on regulatory compliance, corporate governance and effective risk management.

Sir Howard, who has sat on FTSE 100 boards for over 25 years, has seen a shift in the board’s approach to governance. He believes that time, which would otherwise be spent looking forward and assessing growth opportunities, is being eaten-up by “the pressure to demonstrate a robust control framework”.

What can you do to redress the balance? Sir Howard answers: “You can make better use of the risk committee, which should take a lot of the heavy-lifting off the main board. However, be careful that you don’t create two classes of director, one who is focused on risk and the other who can ignore it”.

“The key thing is that the board isn’t dragged too far into the detail and can afford to pull itself into more strategic thinking. You could also ensure that there are board and off site meetings in which risk and control are banned topics and you focused on innovation.”

For Guy Elliott, Deputy Chairman at SABMiller and Non-executive Director at Royal Dutch Shell, boards need to embed their obligations into strategic discussions.

“Often compliance and risk are segmented as a special discussion on the board. Board members may think they tick that off every six months, and if the audit committee has said that the processes are fine, they feel they’ve done their job,” he says.

“You have to go further than that. What you should be doing with risk, a lot of the time, is integrating it with strategy and futurology. For example, one might think about what’s going to happen to consumer habits; what rate of growth you’ll see in emerging markets compared to a developed one. Integral to that is exploring how you are going to chase an upside risk or mitigate a downside one.”

All-pervasive technology

The nature of innovation in the digital age means that directors require a much deeper understanding of technology. Natarajan Chandrasekaran, CEO and Managing Director of Tata Consultancy Services, says: “All of us, in every industry, are going through a transformation; the biggest [challenge] is that before technology was supporting business, now it’s leading it.

“It’s no longer the case that once the business model is decided, you deliver the technology to support it. Now, it’s absolutely essential that you appreciate the power of technology so that you’re able to define the future of the business.”

This sentiment is echoed by Stine Bosse, Member of the Supervisory Board of Allianz and Chairman of BankNordik. “I would argue that you can’t talk about anything in the future without considering technology. Last year, it took up about 30 per cent of board time. That included educating the board – we have to go into the machine room and understand the technology, then we can think about its impact strategically,” she comments.

“At Allianz, we have just had a full day looking at where disruption is likely to come from – a full day for the board is a lot of time. We were thinking about driverless cars and the implications for insurance.”

Even with this level of education, Stine believes that the composition of the board room will change. “The average age will fall because boards will need to have age diversity. Intuitive knowledge of technology [needs to] enter the board room. Of course, [everyone] has to be able to satisfy the regulators’ requirements, but let’s not be too frightened about that; you can educate yourself to that end.”

Ultimately, it’s a case of developing a board that has the confidence to invest in change and encourage the business to move forward. Guy says: “We have to have more discussion about technology and disruption in the boardroom. That doesn’t necessarily mean that a CIO needs to sit on the board, but they need to be there, talking the language of the board. It is important that what they say actually means something to everyone around the table. It’s difficult to make that linguistic transformation, but it can be done.”

Of course, the other side is that to ignore market disruption is a dereliction of duty. Rita notes: “Risk management can be seen as putting a brake on proceedings and trying to stop things from happening. With the speed at which most markets change these days, a key risk is not to innovate. If we’re not careful, the board will be seen as trying to stop things from happening.”

These comments were made during a panel discussion at Tata Consultancy Services’ European Summit in Berlin.

By Joshua Tearney, Account Manager, Advisory Practice

Do you have a story about innovation? Please share your perspectives by emailing: dawn@criticaleye.com

Don’t miss next week’s Community Update on how to change your leadership style.

Listening to Tomorrow’s Leaders

The founders of Snapchat and Airbnb were aged 21 and 26 respectively when they launched their companies. This shows when it comes to disrupting a market − or creating entirely new ones − age is merely a number. What are corporates doing to capture the ideas of their outstanding young talent?

“We thought you could only get value from people after they’d been in the business for five to ten years, but we’re breaking down those perceptions,” says Dominic Samengo-Turner, CEO of Jardine Lloyd Thompson (JLT) Asia, a subsidiary of the JLT Group.

Reflecting on the way the company changed its approach to career development 12 months ago, Dominic continues: “We take our quality graduates after a year and put them with senior executives as an executive assistant. Their thinking and observations then start to influence the business in a more informal way.”

The success of this now means the company is taking it to another level. “We [then] put that generation in junior management positions of influence. We’re creating new management roles that didn’t exist before so that they can add value to the business,” he says.

This is hugely valuable to JLT which, as a legacy business, has a number of employees whose length of service spans two to three decades. Dominic explains: “We don’t need [millennials] to have deep, technical competence – the older generations have that. We need to help facilitate the operational running of the business. We feel we’ll move much faster than originally thought.”
Seeking new perspectives 

Different voices, views and generations need to be heard at board level; this is something John Brisco, Senior Vice President, Chief Information Office and Chief Operations Officer at Manulife Asia, welcomes.

“Many boards today have a very traditional make-up of constituents who quite rightly have thorough industry and career experience. However, the pace of change driven by data and digital innovation… means there may be a requirement for the make-up of a modern board to have a new mix,” he says.

“There may have to be a wider dispersion of board constituents, that may involve millennials but it could also involve 35 to 40 year olds, who I would say aren’t represented on boards that well. I would ask: ‘How can boards expand their thinking, what type of skillsets do they need and how can they make sure that age isn’t a barrier?’”

In light of this, John is currently exploring the advantages of an advisory board – made up of a range of individuals from millennials to entrepreneurs – to support Manulife’s Asia-based leadership team.

“It will independently challenge us on our ideas. Some will come from an entrepreneurial mindset, others from a consumer background or technology mindset. That will create a healthy tension,” he says.

Connecting with the customer

The notion of millennials on the board may be a step too far for some, especially in the context of a regulated environment.

Romana Abdin, CEO at diversified healthcare company Simplyhealth, says: “The role of a director in the boardroom is to challenge, critique and support; I don’t think many millennials would possess the experience and gravitas to make that kind of contribution unless they are supported through coaching and mentoring. It is our responsibility to develop the outstanding leaders of the future.”

Yet Romana agrees that the onus is on the board to seek a fresh perspective. “Our board spent a day being customers by visiting different retailers and bringing those experiences back into our organisation,” she comments. “It’s about understanding the aspirations and behaviours of all generations, including millennials… It is only by understanding customers and their lives that we can be valued and valuable.”

According to Charlie Wagstaff, Managing Director at Criticaleye: “Boards, executives and HR functions need to think about how to blend talent of all ages.” Indeed, the belief that all the best concepts come from the top of the organisation is outdated.

“Leaders need to ensure a company’s employees reflect the diverse customer base it’s targeting and welcome the fact that ideas can come from anywhere within the business,” Charlie notes. “Each organisation will have its unique set of challenges, but diversity of thought is hugely important.”

There’s no doubt that there are some supremely talented millennials out there. Evan Spiegel, CEO of mobile app Snapchat – estimated at a net worth of $2.1 billion – is just one of them. He knocked it out of the park early in his career but there are others waiting to make their impact.

Most millennials can’t be expected to lead a complex legacy business today, but they are the leaders of tomorrow. By giving them a voice, you can harness perspectives that better represent your customer base, allow you to innovate and and look to the future.

How are you bringing up the best talent in your business? If you have thoughts to share on this topic, please email dawn@criticaleye.com

This was inspired by Charlie Wagstaff’s blog on millennials – read it here

Don’t miss next week’s Community Update on how to successfully lead complex change.  

4 Lessons on Innovation

What some call innovation, others say is simply staying close to their customers, but surely there’s more to it than that? Here, we highlight four key learnings on how to nurture innovation in order to keep your organisation fresh and relevant.

During the recent Criticaleye Global Conference Call, Creating Innovation Teams, we heard from two speakers, Andrew Miller former CEO of Guardian Media Group (GMG) and Non-executive Director at The Automobile Association (The AA) and Anita Chandraker, Head of Digital at PA Consulting Group.

Here, we highlight four key themes to emerge from the event:

Start with Your Core Offering

According to Charlie Wagstaff, Managing Director at Criticaleye: “It’s not about what you do, it’s about why you’re doing it. As a leader you need to understand your organisation’s purpose, that’s your starting point.”

This is something Andrew, who is also former CFO of Auto Trader, has found to be true. “I’ve been lucky to have organisations that know what they are at the heart,” he said. “Some forget the real thing they should be innovating is what they are at the core.”

At the Guardian the mission was to envisage how its readers wanted to consume news now, as well as in the future, whereas at Auto Trader the focus was on moving its marketplace for people to buy and sell cars online.

When Andrew joined Auto Trader in 2002, the business had around £18 million profit, 24 magazines and no digital presence. Now all of its content is solely online and it’s valued at over £3 billion.

“You should celebrate the heritage of the business but accept that ‘celebrate’ doesn’t mean ‘protect’. You’ve got to know what you are to get that excitement back in the organisation and then innovate around it,” Andrew added.

Anita from PA Consulting Group, noted: “Innovation has to be linked to the core of the business, its objectives and challenges, and what customers or clients want. If an organisation is under threat from disruption then the imperative should be to solve that.”

It’s About Leadership, Not Technology

“A lot of people overthink what has to get done, but actually the fundamentals of innovation and change are what most people would refer to as common sense. It’s not really about technology, it’s about leadership,” Andrew said.

“It’s getting the leadership team, the board and your employees to accept that there is a need for change. Unless there is a real desire to change then there’s no point investing time and money.”

It has to start with the CEO and the board, and then the CEO has to get the exec team behind it. “You have to be quite brutal and accept that some people won’t make that journey and proactively manage that,” Andrew commented.

Charlie added: “Scale is no longer a differentiator for businesses, it’s all about speed and leaders need to work out how to drive that in their organisations. They need to provide a framework that supports that.”

Find Out What ‘Agile’ Means to Your Company

Businesses must learn how to exhibit speed and build momentum. “It’s about iterating fast,” Andrew said. “It’s about seeing ideas that work and trying things. The speed at which I see tech companies iterate is phenomenal. Look at Snapchat, which is the fastest growing media distribution brand.”

Change won’t happen overnight, especially in large organisations, but big businesses need to trial new ways of working. Anita noted: “There has been a lot of talk about agile from a software development perspective; now that conversation has moved on to how you make large organisations more agile, how to break down siloes to make an organisation simpler and faster so it delivers results.”

Matt Barry, Chief Operating Officer for Mass Hosting at web company Host Europe Group (HEG), has worked both in organisations in which innovation is kept separate from the core business, as well as one with a more collaborative cross-functional approach.

Prior to joining HEG, he spent four years at a Fortune 50 cable TV company as Product Manager in its newly formed Converged Products division, tasked with rebuilding the experience from the ground up.

“They realised they needed to get something going quickly without the normal politics you get in a big organisation,” he explained. “So, they set up a completely separate team, got new blood in – web people rather than TV – and put us in a new office.”

At his current organisation Matt has implemented a group-wide way of working that uses agile development practices whereby a number of small teams take ownership of a particular project, which is typical of software development companies.

Andrew also had two different experiences at Auto Trader and GMG. “At Auto Trader we set up new business… that essentially cannibalised the old,” he explained.

“At the guardian it was about the disruption of content in the new world therefore we couldn’t isolate the new from the old, it had to be much more intertwined – that was much more complex.”

Don’t Get Hung Up on ROI

New propositions will call for different metrics and measures, rather than return on investment alone.

Anita noted: “If you’re encouraging the organisation to come up with ideas, you’re not going to be looking at financial return over a short period. You might be looking at the potential for an idea to disrupt a market, or the opportunity for growing market share. That can be a big challenge for large companies.”

Small wins in terms of revenue can be huge in terms of customer engagement; it’s about changing the mindset.

Andrew, a former CFO with a financial background, agrees that ROI can be stifling: “At Auto Trader the targets were the number of dealers that we had on our CMS system, then the number of people on the website, followed by revenue. If we had set ROI parameters, we would probably have shut down in 15 months. At the Guardian, the most important measure was the engagement of users.”

You do, however, need limits on investment and this can often come down to ownership structure. Matt explained: “Realistically, it depends on which stage the company is in to answer the question about metrics. A PE-backed company in late stage investment will argue that it’s all about ROI — and that’s true if you are preparing for sale.

“However, early-stage investment companies or one that is well-funded and seeking market share, or one that holds a leader position and wishes to maintain it, will be more flexible.”

By Dawn Murden, Editor, Advisory

What are your thoughts on innovation? If you have an opinion that you’d like to share, please email Dawn at dawn@criticaleye.com

Want to know more about agile project management? Read our article Agile by Design

Find out more about our upcoming Global Conference Call, Sector Watch – Building Partnerships in Financial Services

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Innovation Vs Corporate Antibodies

When Google gave birth to its own parent company, Alphabet, earlier this year it may have been onto something. By creating an umbrella company it was able to separate not only Google and its web-related products, but also Google X, its experimental research division.

“They recognised that you can’t set up innovative ideas in a mainstream business so they’re allowing them to be separate. I think that’s probably the only way that you’ll overcome the gravitational pull of the big organisation,” says Martin Hess, VP of Enterprise Sales for the UK & Ireland at Hewlett-Packard.

In Criticaleye’s recent Global Conference Call, Building a Culture of Innovation, held in association with BDO International, leaders agreed that pockets of innovation are often more effective than trying to reshape the entire organisation. But support is needed if those green shoots of creativity are to grow.

Edd Read, Co-founder and Chief Technology Officer at snacks company Graze, explains how, like Google but on a smaller scale, it has fenced off its sapling ideas. “In the last few months we put a focus team together to resolve a particular problem we had with the business. We gave them a mandate to do their own thing. We were really clear on the objective but ultimately left them to it,” he explains.

It meant not only separate KPIs but also a different room in which they could talk freely about their ideas without colleagues listening, assessing and infiltrating.

However, he also realises that there are limits to this approach: “We can’t keep putting people into rooms to solve problems. We need to learn from the process they’ve been through to understand how we can make changes in the business.”

As Andrew Minton, Managing Director of the Advisory Practice at Criticaleye, notes: “Companies must protect and nurture their innovative side projects if they’re to benefit on a wider level and stay competitive.”

If the innovation behind a skunkworks is to grow outside the context of its own silo, it must find something to stick to, or what Martin calls “corporate Velcro”. Skunkworks have a finite life, so this ‘Velcro’ is essential if innovative ideas are to “overcome the organisational antibodies that come out,” he reasons.

Martin gathered a team of 12 people at HP to create an independent digital practice within the company. The remit was to build a new revenue stream and to reposition the brand. The success of the skunkworks became its own burden. Everyone wanted a piece of it, which threatened the project’s autonomy.

“Digital crosses the organisational boundaries,” Martin explains. “For example in HP, we have an analytics practice, security business and integration division – digital is a theme that weaves its way through all of those organisational entities and they each wanted to grab it as theirs. Although they probably didn’t realise they were doing it, they were fighting against it being a separate entity.”

Failing with fortitude

Recreating your company in the image of an innovative virtuoso like Google or Graze can be a daunting task.

Beverley Eagle Head of HR at Veolia Water Technologies, warns that “in order for any skunkworks to succeed, the culture within which it operates needs to be open to innovation and change and there must be commitment from the top of the organisation. It’s vital that senior management communicate the objectives of the skunkworks with clear goals and guidelines.

“Resources need to be agreed in advance and communicated to everyone so the larger organisation understands the benefits of the skunkworks and why it may not be carrying full costs,” she adds.

Simon Pringle, Head of Sustainability and Innovation at BDO agrees that it can be hard to stand firm and alone in strong headwinds, which is why he heartily argues for a clear mandate: “In the absence of a really well explained purpose and intent, a systematic approach to innovation can lead an organisation to march briskly in completely the wrong direction.”

In addition, it’s not unusual for people to become too close to the projects they’re working on, which can lead to optimism bias – an unreasonable expectation for what can be achieved, notes Simon. As such, he advocates a sturdy corporate governance structure that “knows when to pull the plug on things, and when to be persistent and robust”.

When things do go wrong it’s important not to penalise people despite their effort. Indeed, failing is part of the process, but the trick is to recover quickly and learn from it.

Simon illustrates this point with the story of a major steel company which gave out a ‘heroic failure award’ – a pat on the back for someone who had failed but learnt through the process. “That one got the biggest cheer of the night. I thought that was a tremendous way of encouraging people,” he says.

KPIs and financial incentives are another way to encourage creative ideas, but only if you get them right. In a former role at an engineering organisation, Simon realised the targets were actually stifling experimentation with staff hitting but never exceeding them.

“We’d unconsciously placed a constraint within the business; people were beginning to fear the consequences of missing the target by being bold… so they played it very safe,” he explains.

The tincture was to reassure staff that even without success, a valiant attempt would be recognised rather than chastised.

To get all this right, you need a CEO who’s continuously signalling for change, says Martin. “Unless it’s set in your objectives, you probably won’t see it happen.”

As with many leadership issues it requires clear communication. Andrew notes: “Only if leaders voice, and continually champion, the company’s need for innovation will those lower down live by that ethos.”

By Mary-Anne Baldwin, Editor, Corporate

Do you have a view on this subject? If you have an opinion that you’d like to share, please email Mary-Anne at: maryanne@criticaleye.com

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Leading a Digital Culture

Comm update_14 JanuaryAs new technology continues to turn traditional business models upside down, the onus is on executive teams to embrace change while encouraging employees to think and act differently. It means challenging conventional approaches, testing ideas and creating a ‘digital culture’ within an organisation which is attuned to and reflective of changing customer expectations. It’s inevitable that the companies that fail to adapt will struggle to compete effectively.

For large, well-established organisations, deep-rooted changes are required. Julian Payne, Line of Business Director for Solutions at De La Rue, a supplier of identity and product authentication services to governments and multinationals, says: “If you’re a first-generation digital start-up business or technology company, you don’t have to think about digital culture, you just have it. You have an agile development team… and you are open to change.

“Whereas if you’re working in a bigger business or a business with a significant non-digital legacy… you’ve got to think about the DNA of the culture that you want to create… It means thinking about what’s happening in the wider context around everything from hosting, to the cloud and big data analytics.”

Laura Haynes, Chairman of brand consultancy Appetite, explains that digital needs to be part of the core business: “People think about digital as being something outside their regular business issues, but it is time to think differently and recognise that the first way to reap the benefits of a digital culture is to break down silos and integrate digital thinking and processes throughout the business.

“Sure, there will be parts of digital that may need new technical expertise, but there is the opportunity to explore the potential to improve processes and communications, but this means embracing digital.”

It’s about connecting the established practices with the new, and reaching a balance which allows digital to enhance or adapt the traditional offering. Bal Samra, BBC Commercial Director and Managing Director of BBC Television, who is leading major digital projects such as BBC3 Online, the iPlayer and BBC Store, comments: “Our values at the BBC are always going to be the same… but we are in a different world – it feels like everything is speeding up… You need to create a culture in your organisation to evolve from the old to the new.”

Executives on point 

Senior executives in an organisation need to take the lead on digital. Bal says: “The CEO has to set the pace of the vision… So that means constantly talking about the world around us and how it’s changing, and moving that from being scary to being an opportunity.”

Leaders need to be open-minded. Laura says: “The challenges are understandable because if you take a lot of senior leadership, they’re having to relearn a way of thinking that doesn’t come naturally… it’s not just about learning techniques; it’s about learning to think differently about processes, about truly interactive and real-time communications, about the utilisation of information and how to analyse what’s in front of us, as well as new media.”

Julian says you have to “remove fear and de-risk digital” through experimentation and education: “Get them to play at home more. Ask them to use some of the modern apps that, frankly, kids are using.

“You need an interpreter role, it might be your CTO or it might be head of R&D. Someone who can take relatively complex concepts of digital and introduce them to a board… [Crucially] you have to be really clear about where the customer value lies, the cost to achieve it and the steps to take.”

Younger employees are increasingly being turned in order to share their digital expertise, acting as reverse mentors for an older generation. Paul Brennan, Chairman of cloud infrastructure software provider OnApp, comments: “You need to utilise younger people who are going to be the consumers of your products and services in ten years’ time, to understand how they want to communicate with you.”

Allied to this, employees should be allowed to experiment and test ideas. “You fail fast and learn,” says Bal. “What you want is an innovation kind of culture which says if you fail… and if something doesn’t work, you move on. You’ve got to create a culture that allows people to challenge the conventions.”

For this ‘digital culture’ to be meaningful, it has to be joined-up with how the information generated by technology is being used to bring about collaboration, experimentation and to inform decision-making. “New technologies enable us to act in a very different way,” says Emma Cooper, Managing Director of UK Health and Public Sector, and Organisational Change Lead for the UK and Ireland, at Accenture.

“They allow us to tap into workers anytime, anywhere… Digital is changing organisations, silos and hierarchies.”

Helen Murray, Chief Customer Solutions Officer at Webhelp UK, a company that provides outsource customer services, says: “Huge insights can be gained from analysing conversations, utilising voice and text analytics, to truly understand customers’ emotions, frustrations and behaviours, and combining that with more traditional, structured data analytics… You need to ensure all customer engagements consistently reflect and represent the brand.”

In order to fully endorse digital, leaders have to understand the tangible business benefits. Paul comments: “A lack of awareness of the value proposition means you could miss opportunities, so education is important for senior executives to fully embrace digital. You need to understand the benefit to your organisation.”

At the very least, they have to be honest about where gaps in knowledge and expertise may lie. Mike Greene, Chairman of pharmaceutical and consumer healthcare company WinchPharma Group, says: “Boards need a diverse mix of experience, energy and ambition… If they haven’t got someone who’s digitally savvy and digitally confident then their board is missing something, but unfortunately they often recruit in their own image.”

Helen comments: “Digital is so critical to businesses… It’s essential that digital is in its DNA, not a separate operating unit; not an adjunct… It needs to interface seamlessly with the rest of the organisation.”

Large corporates may struggle to embrace a truly digital culture, but senior executives must rise to the challenge. Ultimately, leaders need to ensure they are open-minded and willing to learn, while utilising new technologies and data in order to empower employees to meet changing customer demand.

I hope to see you soon

Matthew

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Looking Back on 2014

Comm update_31 DecemberWhen reflecting on some of the central themes to be discussed by Criticaleye Members over the past year, be it digital, the changing consumer, an ageing population, innovation or culture change, it’s abundantly clear that successful senior executive teams understand the need to be collaborative, curious and open to new ideas and insights. How else can they be expected to navigate complex and fast-changing global markets?

Steven Cooper, CEO of Personal Banking at Barclays, said: “The environment that leaders need to create, I think, is changing. They need to be much more inclusive, more visible and they need to be engaging with a broader spectrum of colleagues to create partnerships.”

It’s a point echoed by Andy Clarke, CEO of retail concern Asda: “If you turn the clock back only ten years, the pervasive style of communication for leaders was very much tell-and-do. It’s a dying style of leadership today; you have to operate with a level of openness to challenge that you wouldn’t necessarily have seen a decade ago.”

A CEO has to look to build a team that can thrive in a business environment where strategy is far more dynamic and agile. “The most common thing to do in the world of strategy in business these days is to complain about the V.U.C.A. world we live in – so everything is volatile, uncertain, complex and ambiguous – and then say that because of this it’s impossible to do strategy,” said Roger Martin, Criticaleye Thought Leader and Academic Director of the Martin Prosperity Institute at Rotman School of Management.

“But if an organisation doesn’t understand it has to make choices about where to play and how to win, it might as well not do strategy. That’s why more than eighty per cent of all strategic plans are pretty much useless.”

A numbers game 

The strategic implications of a multigenerational workforce is certainly an area that requires careful thought. Mark Purdy, Managing Director (Economic Research) and Chief Economist at Accenture, commented: “We’ve recognised that there’s a major trend around ageing and increasingly organisations are thinking about this, but maybe what we haven’t recognised is that we have a lot of millennials in the workforce too…

“[T]he successful organisations are going to be defined by their ability to bridge the gap between the ages and capitalise on the inherent strengths of both young and old.”

It’s leading to new ideas on how technology can reshape working practices, from home-working to hot-desking and job-sharing. Vanda Murray, Criticaleye Board Mentor and Senior Independent Director at manufacturing company Fenner, said: “Businesses need to invest in IT to enable flexible working, which may be from home or any remote location, as it is now expected that we are all ‘connected’ wherever we are.

“There are huge benefits to businesses that embrace more flexible working patterns and practices. It helps recruitment and retention – in particular those workers with family commitments – be it younger children or elderly parents. Young mothers often find they cannot balance work and home life without this flexibility for example.”

The way digital continues to change organisations has been another area of debate and discussion for executives. Bal Samra, BBC Commercial Director and Managing Director of BBC Television: “Digital disruption is inevitable so business leaders need to recognise it, collaborate and foster a culture of learning within the organisation so that more is understood with every new project.”

One of the biggest risks for companies is to do nothing with digital. If you’re not constantly testing, learning and evolving, you will be left behind. Simon Johnson, Group Managing Director for UK & International at publisher HarperCollins, said: “Innovative digital leaders are those who are completely obsessed with inventing things and with customer experience… They also need to create the right culture internally, encouraging the people within the business to think more like a start-up.

“This might mean starting-up a skunkworks for innovation, for example… or setting up new business units in direct competition with legacy ones.”

The question of how organisations can excel at innovation remains fiercely debated, especially as new business models emerge. Neil Stephens, Managing Director for the UK and Ireland at food company Nestlé Professional, comments: “The narrative I always put around the need for breakthrough innovation is that the customer is constantly changing and they are always eager to find new ways to enrich their lives…

“[That’s why] we are trying to bring our customers into the innovation loop as early as possible so that, by the time we go to market, we already have customers who are attuned to the opportunities and who have been part of the process from the beginning.”

George Yip, Criticaleye Thought Leader and Professor of Management at China Europe International Business School, observed that Western companies need to learn how to innovate faster and take more risks, whereas Chinese organisations need to learn how to innovate in a more formal way. “Being pragmatic about the kind of innovation companies do is the key to achieving profitability in the digital age,” he said.

If a business has any hope of performing to the highest level, it needs the best people. Creating a culture that attracts and retains those individuals and allows them to flourish is perhaps one of the biggest tests confronting senior executive teams.

Rudi Kindts, Non-executive Director for technical recruiter Matchtech and former Group HR Director for British American Tobacco, said: “We don’t know what the future will look like, so I think increasingly the skills required to be a successful leader will be around agility, curiosity, being able to work in teams and having an acute awareness of the environment around them and themselves.

“What is for certain is that leaders need to build organisations that are able to adapt to the future [and be flexible].”

For CEOs, it’s a case of asking more of the Human Resources Director. Steve Varley, Chairman and Managing Partner for UK&I at EY, explained: “A key benefit of the HR Director is to help leaders understand the link between the inputs and outputs of an organisation.

“Effective ones do two things: they understand the business model – how the business makes money – and, secondly, they work hard to build relationships with the CEO and the board.”

Doug Baillie, Chief HR Officer for consumer goods company Unilever, said: “When I came into this role three years ago, the first thing I did was to get key senior business leaders into a room together and ask them what they expect from HR.

“From this, the choice that came to me was clear: do we, as HRDs, want to be the ones laying the road for the journey ahead or are we content to just fill in the cracks as someone else lays out the path? Actually, I don’t differentiate between a HR Director and a business leader.”

The bottom line is that CEOs need to be great communicators and collaborative if they’re to be good at leading change. As Glen Moreno, Chairman of publishing and education company Pearson, said: “It is extremely rare today for a new leader to come into an organisation with a mandate for business-as-usual. That wasn’t always true. There were times when companies had locked market share and there wasn’t much of a technology challenge, nor was it global.

“It’s all changed now and there are virtually no maintenance jobs anymore because companies are either in trouble when a new CEO comes in, or they clearly need to rethink their position on what they’re already doing.”

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

Leading Breakthrough Innovation

Comm update_19 NovemberNo executive team wants to experience its own ‘Kodak moment’, whereby a tried and trusted business model is rendered obsolete. That’s why incremental innovation, where a company invests in improving products and services, won’t be enough to protect its long-term market position. The real alchemy lies in creating a culture which provides a continual stream of fresh ideas that have the potential to transform an entire industry.

“Breakthrough innovation is about changing the paradigm.” says Colin Hatfield, Founder of communications specialist Visible Leaders. “It’s about leaders coming up with new models, looking to new markets, breaking through with new consumers and actually doing things in a very disruptive and different way.”

Once corporates reach a certain size, the focus on margins and process can extinguish that entrepreneurial spark which is crucial for genuine invention. So, how can large businesses recapture their innovation mojo?

Bal Samra, BBC Commercial Director and Managing Director of BBC Television, has led innovative projects like BBC Online, Radio 5 Live, the iPlayer, and BBC Store, an online commercial service for audiences to buy and keep BBC programmes which is due to launch next year. “It’s important to be open about change, what it means for the organisation, how to think about it and how people can get involved,” he says.

“For example, rather than convincing everyone that moving forward with BBC Store isn’t going to be too disruptive, you almost do the reverse – you openly communicate as a leader that it probably will disrupt the conventional model and what we really need to think about is how we manage that. Too often as leaders we don’t have an open dialogue with our teams and our organisation about what disruptive change actually means… Equally, we don’t do enough to talk about what the opportunities are for people in terms of developing new skills and new experiences.”

Steve Muylle, Professor and Partner at Vlerick Business School and a Criticaleye Thought Leader, provides the example of BNP Paribas, which launched its mobile retail bank venture, Hello Bank, in 2013: “[Its launch] was communicated from the group level at BNP Paribas by the Chief Operating Officer, then rolled out at country level by each of the regional CEOs.

“The messaging was important because the leadership said they believe in the potential of both models… [While] they believe the disruptive business, mobile, is the source of future growth… they are still innovating in the core model, even though it is more incremental innovation… [Leaders need to consider how] solutions in one model reinforce the other, without undermining it or developing a conflicting situation.”

Deciding where to house your innovation team often presents a dilemma. Mark Parsons, Chief Customer Officer for the UK and Ireland at DHL Supply Chain, says: “Skunkworks, where you bring all the innovation together in a silo… are appropriate in certain circumstances in which you need to get around something that will impact the overall business substantively.

“How you get that to market is important but you need to work through what the majority of the implications are for the business before you actually launch it… You need that protection and also the ability to focus your attention on trying to develop the end product.”

There’s a risk that, with a siloed approach, you lose sight of what customers actually want. Neil Stephens, Managing Director for the UK and Ireland at food company Nestlé Professional, comments: “I get slightly perturbed when I hear [leaders] talk about innovation in isolation because it’s not an end in its own right; it’s a means to an end. For me, the end is always in creating disruptive services or solutions that customers are delighted by…

“The narrative I always put around the need for breakthrough innovation is that the customer is constantly changing and they are always eager to find new ways to enrich their lives… [That’s why] we are trying to bring our customers into the innovation loop as early as possible so that, by the time we go to market, we already have customers who are attuned to the opportunities and who have been part of the process from the beginning.”

For Bal, creating teams that work across business divisions helps to encourage an innovative mindset: “Creating smaller teams that work in collaboration is the way forward and co-location is a big part of that. Innovation is actually delivered through that serendipity, where you have people bouncing off each other’s ideas; those connections are really what you are trying to promote.”

Nothing ventured

Leaders will often talk about innovative companies building a culture where people are allowed to fail. Ideas will be piloted, tested and experimentation actively encouraged, although of course results will be expected at certain intervals. Aimie Chapple, Chief Innovation Officer in the UK and Ireland for Accenture, says: “It is important to be transparent and to expect both great successes… and great failures, where we have more to learn or to try something new.”

“[It’s about making it acceptable for employees] to risk doing something amazing. The barrier for getting it wrong… [can’t be] so high that it stifles the very people who may be able to see the best new ideas around them.”

Koray Gul, Vice President for General Merchandise, Hardlines, George, and GM Sourcing and Quality at supermarket chain Asda, comments: “The first rule of innovation is allowing teams to make mistakes. This is always hard in what is a very competitive business environment, but if people play safe there is absolutely no room for fresh thinking.

“Innovation takes courage and as leaders we need to support it. Trial and error is an essential part of the innovation process and, rather than calling the trials ‘failures’, we should call them ‘learning opportunities’ and share [what comes] out of them.”

Having brilliant people will certainly be important, but a heavy responsibility falls on the senior executive team to communicate why disruptive innovation is necessary. Mark says: “Leadership makes all the difference because when a leader says, ‘I really want to get behind this idea’ and ‘this is important to me’, it focuses attention.

“They’ve got to be selective because they can’t burn up too much of their political capital, so it’s about choosing which ideas to back… then visibly promoting them.”

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

Winning Strategies for Asia

Comm update_12 November1 The scale and pace at which markets across Asia are growing can leave you breathless. For both indigenous and foreign corporates, the pressure is on to move fast, whether it’s responding to urbanisation, creating new technology or simply meeting customer demand. It all presents a rigorous test for executive teams as they are expected to devise winning strategies in a complex, competitive landscape where talent is in short supply.

These were some of the key themes to emerge from the Criticaleye Asia Leadership Retreat, held in partnership with China Europe International Business School (CEIBS). Over the course of 24-hours, attendees gathered in Hong Kong to share ideas on innovation, sustainability, talent and what the rise of China’s private enterprises means for multi-national corporations (MNCs).

Hellmut Schütte, Vice-President and Dean of CEIBS, observed: “Perhaps the golden age in China is over for foreign MNCs. Everyone is here now, labour costs keep rising, and China’s own MNCs are making enormous progress.”

Aside from the emergence of international powerhouses like e-commerce conglomerate Alibaba and telecom equipment and smartphone maker Huawei, competition was described as particularly acute in China’s third and fourth tier cities, where an increasing number of home-grown private enterprises are capitalising on their local market knowledge. “China still presents significant opportunities for MNCs but it’s now a lot harder to realise,” said Stephen Mercer, Partner in Charge of Multinational Clients at KPMG.

“You have to understand what segment of the market you are dealing with as they can be so different. If you were operating in Europe, you wouldn’t replicate your market entry strategy for each country or market and China [is] the same. Unless you are clear about what you are trying to achieve in China, it will be very difficult to succeed.”

For those companies that do get it right, China’s $9.2 trillion economy provides plenty of openings and areas for growth. Hellmut said: “If China ‘only’ continues to grow its GDP by 7 per cent over the next ten years, it will still almost double the size of its economy. If you combine [Brazil, Russia, India and South Africa] … and the next ten emerging markets, all together they add up to the size of China’s economy today. This is very much in the mind of China’s Government when it deals with the outside world.”

The ability to bring new products to market rapidly was generally agreed to be a significant differentiator for successful businesses. George Yip, Professor of Management and Co-Director of the Centre on China Innovation at CEIBS, said: “Chinese companies have a deep understanding of the customer – [they take] a pragmatic, profitable and customer oriented approach to innovation… Western companies can be too slow because there are too many processes in place.”

Sujit Chatterjee, President & CEO of TATA Consultancy Services China, said that “innovation, as it was understood in the Western world, was for a long period about creating new markets, but, as we see in Asia, especially China, innovation is about capturing markets”.

Companies have to be capable of adjusting to the characteristics of a rapidly changing and geographically diverse country. “Each year, Western companies set-up more R&D centres in China than in any other country in the world, including the US,” George added. “Western companies have an appreciation for Chinese methods of innovation; they are eager to learn how to innovate faster.”

A long-term view

If businesses are to continue to take advantage of the consumer appetite for goods and services, attendees agreed that it needs to be done in a sustainable fashion. Peter Wong, President of Dow Chemical Greater China, said: “Sustainability is very much part of our strategy in terms of driving business growth. For example, in China we are looking at a few of the issues the Government is focusing on, such as food security and safety.

“If we bring our capabilities together, we believe that we’ll be able to find a solution that is going to help the Government tackle some of these challenges, like food spoilages.”

Setting the right strategy and implementing it is key. Peter Lacy, Managing Director of Strategy Practice & Sustainability Services for Asia Pac at Accenture, said: “Companies need to be aware of opportunities to improve their approach to sustainability… It needs to be integrated into organisational design so that support functions are created to incentivise people, so they want to make improvements. That’s as true here in Asia and China as it is elsewhere in the world.”

The challenge is to create alignment across the whole organisation. “At Dow in China, I’ve been trying to build a cross-collaboration model,” said Peter Wong. “It’s been about looking at what the issues are and seeing how people can jump beyond their own boundaries. Hopefully they’re thinking about how we can better collaborate, utilising the R&D lab to [address] the issues we have – if you don’t even understand your true capability, you can’t really develop an innovative mindset.”

Cecilia Ho, President of International Paper Asia, commented: “There actually has to be a change in mindset around sustainability; you’ve got to accept that if you do not operate sustainably you cannot operate at all. [If you understand that], then you’ll do it because it’s beneficial to the company as well as to the environment…

“You can do all the communication and internal marketing – and we certainly do – but the most important thing is that employees are convinced that you practice what you preach. So it needs to be driven by the senior leadership team.”

According to Peter Lacy, thinking sustainably can be a real driver for innovation:  “At the moment a lot of the focus in Singapore, India, China and Japan is on urbanisation and smart technologies and how they can be used to better manage energy and transport systems. There is a ‘digital revolution’ taking place, and we are really only just beginning to see the power of connected physical and digital infrastructure in areas like cloud computing, mobile tech [and the] Internet of Things (IoT).

“This is clearly a strong business imperative, but it’s also a sustainability benefit… Companies in China especially are using things like smart-metering and smart-grids to drive energy efficiency per unit of GDP.”

Matthew Smith, Global Head of Market Development for the Internet of Things at Cisco Systems, estimates that over the next ten years the connectivity of devices will create profits and cost savings of approximately $19 trillion. “People are not afraid to fail in China and that type of attitude is going to be really beneficial in this kind of economy,” he said.

The impact of the IoT will be felt in multiple sectors, from retail and healthcare to life insurance and, of course, energy. Matthew continues: “Texting went from zero to $300 billion in about six years. Thanks to WhatsApp and We Chat, it’s gone back to zero again – the point is a lot of new markets will emerge due to the Internet of Things.”

People first

If technology is unlocking new business models, and globalisation creates a more competitive environment, what kind of skills-mix is required to come out on top? Even for those companies that have a theoretical answer to this question, the reality of identifying and keeping the right people continues to be tough.

In the marketing industry, for instance, digital is having a seismic impact on the way customers behave and this requires a different set of skills. Chris Riquier, CEO for Asia Pacific at Taylor Nelson Sofres, said: “As marketers, we’re not investing sensibly and we’re not recognising the ROI today. We’re also ignoring new platforms, which means we don’t have the skills and expertise in the business.”

The quality of graduates, particularly in China, was also discussed. Hellmut questioned whether the country’s education system, with its emphasis on hierarchy and rote-learning, was preparing the younger generation for the dynamism and innovative thinking required for the modern workplace. “Ten years ago there were one million graduates, whereas today you have 7.5 million graduates and the number of universities and colleges has doubled during the same period,” he said.

“There has been tremendous growth but there is the problem of young people coming into the job market and being unable to find employment. At the same time, you have companies crying out for people. As companies must innovate in order to compete, it is not easy to find the talent you need when they come from this rules-based background.”

In order to overcome the shortfalls in talent, companies were encouraged to start looking regionally to bring in people of the right calibre. Michael Guo, Partner of Human Capital & Change Management Advisory for Greater China at EY, said: “Businesses are increasingly connected. Ten years ago the prime movers in Asia were China, India and Indonesia…

“Now … there are so many different countries where different solutions are required, and for that you need a diverse range of talent, especially for your senior leadership team.”

Global leadership

When discussing ‘Asia’, it’s important to remember the distinct national and cultural differences. Each country and region will present its own idiosyncrasies in terms of doing business, from how relationships are built, bureaucracy navigated and the regulatory environment understood. Nevertheless, the Retreat demonstrated there are questions being asked of senior leadership teams in Asia that will resonate internationally.

Andrew Minton, Executive Director at Criticaleye, said: “Whether leaders are confronting issues around sustainability, talent or digital transformation, they must be able to… see the bigger picture in order to shape their own strategy.

“That’s why, regardless of geography or culture and irrespective of industry or function, there is an overwhelming need for leaders to step out of the day-to-day if they’re to combat complexity successfully.”

Executives need to be prepared to reflect, collaborate and benchmark with others. Trying to establish strategic clairity in isolation is no longer an option.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

The Digital Dilemma for Banks

Comm update_11 June2Empowered customers are demanding a seamless experience across multiple channels. For traditional financial services (FS) providers, this is presenting a number of challenges as they look to create an integrated, flexible offering which caters to online services, apps and utilises data effectively. As ever, this is easier said than done given the changes required, but it’s clear that failure to move with the times is not an option.

Sandra Leonhard, MD of Digital Channels, Personal & Business Banking at Barclays UK Retail and Business Bank, says: “[A cohesive] digital strategy in FS is customer-centric as well as commercial; it will be disruptive and transformational. The digital strategy will go far beyond a distribution channel and will incorporate digital to drive product changes, transform back-end processes and technology, reinventing the customer interface and evolving the underlying core operating model of the business.”

It means making deep rooted, structural changes to an organisation. Stephen Ingledew, Managing Director for Customer and Marketing, at savings and investment business Standard Life, agrees: “It’s not something that stands alone… it’s integral to what the business is trying to achieve with customers and its commercial objectives. It’s not just about the front-end or having an exciting, engaging website or mobile way of engaging customers … it needs to be end-to-end, up front as well as operationally.”

Sandra adds: “The key is to offer channel choice but to be in line with changing customer behaviour. This means if more customers are demanding… sophisticated digital services, then banks need to evolve and rebalance their offering to remain competitive in the market.”

A similar point is made by Neil Jones, Consultancy Partner at business solutions company TCS (Tata Consultancy Services): “It’s really about understanding what your customers want in the future, and then shaping your digital strategy to deliver those needs.”

Cause for disruption
There is much talk and speculation about how digital is going to change retail finance, particularly in terms of personal interaction and customer service. Brian Stevenson, Criticaleye Board Mentor and Non-executive Director of the Agricultural Bank of China (UK), says: “The branch is going to die just like high street retail is going to die and is dying because people don’t need it anymore… there isn’t a really fundamentally important reason for branches to continue. There is still a need for people to have face-to-face interaction but it doesn’t have to be in a branch the way that people think of it today.”

By contrast, others argue that there is a compelling reason why the branch will remain a core feature of the customer experience. Steve Pateman, Head of UK Banking at Santander, says:  “I have no doubt that technology will play a massive part in the retail and corporate and commercial bank of the future. People will want to have the ability to pay-on-the-move and access information wherever they are… But this is not going to replace the relationship managers.

“It will not replace the branch. You can have the best information system, but if your delivery system with people isn’t up to scratch, then it will backfire. Too many people don’t understand that.”

While the degrees of personalisation may be open to debate, advances in the use of data and analytics have certainly made engagement more complex. Stephen comments: “Our traditional approach to financial services has been to push products out… What the data allows us to do is actually know customers better, engage them on a much more personal basis and then apply how we help them and make things easier for them, based on their experience.”

Banks are in a privileged position when it comes to data, with access to customers’ transactional patterns and often the broader financial make-up of their lives, but many are not taking advantage of this due to restrictive legacy systems. According to a report by TCS from 2013, almost 80 per cent of the 300 FS senior executives surveyed said they were losing opportunities to improve the customer journey in real time due to failings in their existing systems and processes.

Brian comments: “They are relying on core systems that don’t actually analyse the data or produce the data in any way, shape or form that’s user-friendly… financial service providers should ultimately know their customers’ needs better. That should avoid things like mis-selling.”

For traditional financial institutions, utilising information across channels can be incredibly challenging. Neil comments: “You can’t easily change your legacy system… what you’ve got to try and do is build something that sits on top. A good example is Barclays’ Pingit, which enables you to use your phone to send money to someone else’s phone.”

As well as legacy issues, the regulatory environment can be seen as another barrier to digital innovation. Neil adds: “It’s a millstone around the neck of every single financial service operator… the barrier is often: A, the quantity of regulation, and B, how many organisations and regulators interpret it. So ensure you comply, but use compliance to change the way you operate and try to innovate.”

Expect a surge in ‘pure-play’ digital financial service providers over the coming years. While they may not have the scale of established institutions, they may bring brand new ways of providing services and engaging with customers which will cause ripples in a sector that has been set in its ways for far too long. “If you are a new player… you don’t have [the] history and you don’t have to migrate old products to new platforms, or old technology to new technology,” says Brian.

There are some real strategic and operational dilemmas for financial service providers if they are to deal with the transition to digital. What is beyond doubt is that while risk, trust and security need to be managed impeccably, change is inevitable because it is all being driven by the customer.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk